On January 1, 2020, Carp Corp. purchased a printer designed to print documents for a cost of $2,800. In addition to this purchase price, Carp had to pay $300 cash for installation of the system

The system is expected to last for 10 years, or print 12,000 documents, after which time it will have a residual value of $100.

1. Give Carp’s journal entry to purchase the printer.

2. Calculate Carp’s depreciation expense for 2020, 2021, and 2022, under the straight-line, unit, and double-declining balance methods. Assume that the printer printed 800 documents in 2020, 1,600 documents in 2021, and 1,200 documents in 2022.

3. Using straight-line depreciation, what is Carp’s accumulated depreciation at December 31, 2022? What is the net value of the asset at December 31, 2022?

4. Using unit depreciation, what is Carp’s accumulated depreciation at December 31, 2021? What is the net value of the asset at December 31, 2021?

5. Using double declining balance depreciation, what is Carp’s accumulated depreciation at December 31, 2020? What is the net value of the asset at December 31, 2020?

QUESTION 2 - Taryn would like to open a new business as an interior designer, to funds her ambition she sold some of the following assets:

1. Antique Painting that was given to Taryn by her father 5 years ago. Taryn’s father bought it on 20 August 1984 for $2,500. Taryn sold it on 1’st June 2020 for $25,000

2. Taryn sold her car (Toyota Corolla) for the amount of $12,000 on 20’th May 2020, she bought on 1’st January 2015 for the amount of $20,000

3. Taryn sold her Harry Potter’s collection for the amount of $1,500 on 4’th January 2020, she bought it second hand on 10’th October 2018 for $350.

4. Taryn sold her gold necklace for $2,000 on 20’th March 2020, she bought it for $1,200 on 8’th August 2018 5. Taryn sold a sculpture for $6,000 on 1 January 2020, she bought it on December 1994 for $1,500

Advise the Capital Gain Tax Consequences for the above transactions

Select information from Patel Sales and Services financial statements are listed below:

Part A                                                                                                                                     

Calculate the following ratios in the table below for 2020.  Show your calculations to receive full marks).  Results should be rounded to 2 decimal places.

The 2019 results for those ratios are shown in the table below.  In the Conclusion column, indicate whether Patel has improved or deteriorated in 2020 as compared to 2019.

Part B                                                                                                                                      Marks

Discuss Patel’s overall financial position in 2020 compared to 2019 using your results from above.

1. Soundbird Ltd has 600,000 ordinary shares on issue at 1 July 2019, which is the beginning of its reporting period. On 1 January 2020, it issued a further 600,000 ordinary shares for cash. On 1 March 2020, Soundbird Ltd repurchased 10,000 shares at fair value in a market transaction.
Required: What is the correct weighted average number of shares to use in the earnings per share calculation for the year ended 30 June 2020?
Show all your workings.

2.Rosy Ltd determined its profit attributable to ordinary shareholders for the reporting period ended 30 June 2020 as $1,250,000. The number of ordinary shares on issue up to 1 October 2019 was 1,000,000. Rosy Ltd announced a one-for-two bonus issue (one bonus share for every two shares held) of shares effective for each ordinary share outstanding at this date.
Required: What is the basic earnings per share for the year ended 30 June 2020 (keep two decimal places)?
Show all your workings.

Recording Entries under the Fair Value Option—Equity Method

Assume that Fireside Inc. purchased 30% of the common stock of Theater Supplies Corporation on January 1, 2020, for $270,000. Fireside Inc. elected to account for its investment using the fair value option. During the year, Fireside Inc. reported net income of $216,000 and declared and paid dividends of $40,500. The fair value of Fireside’s investment in Theater Supplies common stock is $283,500. Assume that Fireside Inc. has significant influence over Theater Supplies Corporation.

a. What amount would Fireside Inc. report on its balance sheet on December 31, 2020, for its investment in Theater Supplies Corporation?

b. What amount would Fireside Inc. report in its income statement for the year ended December 31, 2020, for its investment in Theater Supplies Corporation?

Note: Use a negative sign to indicate a loss.

Taryn would like to open a new business as an interior designer, to funds her ambition she sold some of the following assets: 1. Antique Painting that was given to Taryn by her father 5 years ago. Taryn’s father bought it on 20 August 1984 for $2,500. Taryn sold it on 1’st June 2020 for $25,000 2. Taryn sold her car (Toyota Corolla) for the amount of $12,000 on 20’th May 2020, she bought on 1’st January 2015 for the amount of $20,000 3. Taryn sold her Harry Potter’s collection for the amount of $1,500 on 4’th January 2020, she bought it second hand on 10’th October 2018 for $350. 4. Taryn sold her gold necklace for $2,000 on 20’th March 2020, she bought it for $1,200 on 8’th August 2018 5. Taryn sold a sculpture for $6,000 on 1 January 2020, she bought it on December 1994 for $1,500 Advise the Capital Gain Tax Consequences for the above transactions,

FC.71 Five-star sells school related products. Their top seller, the five subject spiral notebook, has done very well. The notebook's sales during the back-to-school season (July through October) over the last three years are shown below:

For the five-subject notebook, Five-star's projected sales for the 2020 back-to-school season of are 375,000. Based on the past sales and this year's projected sales, answer the following questions.

Given the above information and using the most appropriate forecasting method, what should be the forecast for July 2020 sales? (Display your answer to the nearest whole number.)

   

What is the forecast for August 2020 sales? (Display your answer to the nearest whole number.)

   

What is the forecast for September 2020 sales? (Display your answer to the nearest whole number.)

   

What is the forecast for October 2020 sales? (Display your answer to the nearest whole number.)

Case Analysis 3: You are the General Manager at the Bicker, Slaughter, and Lynch Law Firm. There is an opportunity to buy out a small law firm that was just started by a young MBA/JD, and you believe the firm can be grown and become a lucrative part of your Firm. With help from your finance leader, you have estimated the following benefit streams for this new division:

Before Tax Cash Flow From Operations

Year 1 $(149,000)

Year 2 $0

Year 3 $51,380

Year 4 $88,760

Year 5 $114,100

Year 6 $129,780

Year 7 $143,640

Year 8 $167,300

After Tax Net Income From Operations

Year 1 $(103,500)

Year 2 $(50,500)

Year 3 $36,700

Year 4 $63,400

Year 5 $81,500

Year 6 $92,700

Year 7 $102,600

Year 8 $119,500

After Tax Cash Flow From Operations

Year 1 $(85,600)

Year 2 $15,000

Year 3 $48,600

Year 4 $72,200

Year 5 $95,550

Year 6 $101,300

Year 7 $125,200

Year 8 $140,200

You estimate that the purchase price for this firm would be $200,000 and that additional net working capital would be needed in the amount of $60,000 in year 0, an additional $15,000 in year 2 and then $15,000 in year 5.

• BSL usually spend about $275,000 per year in advertising. If you make this acquisition, you would ask that advertising spending be increased by an incremental one-time amount of $45,000 in year 0 to publicize the firm’s expansion.

• Your finance leader has indicated that the firm has access to a credit line and could borrow the funds at a rate of 6%. He also mentions that when he runs project economics for capital budgeting (such as a new copier or a company car), he recommends a standard 10% rate discount, but the one other time they looked at an acquisition of a smaller firm, he used a 13% rate discount. Obviously you will want to select the most appropriate discount rate for this type of project.

• At the end of 8 years, the plan is to sell this division. The estimated terminal value (the sale and the return of working capital) is conservatively estimated to be $350,000 of after-tax cash flow help.

Using the data that you need (and ignoring the extraneous information), for this potential acquisition, calculate each of the following items: the Nominal Payback, the Discounted Payback, the Net Present Value, the IRR.

In an MS Word document, in paragraph form, respond to the following questions:

1) From a purely financial (numbers) perspective, would you recommend this purchase to management? Why?

2) What are some of the non-financial elements that need to be considered for this proposal?

3) Assumptions in project economics can have a huge impact on the result. Identify 3 financial elements/assumptions in your analysis that would make this project financially unattractive? In other words, what would have to be true for this to be a bad investment?

4) If you were the CEO, would you approve this proposal? Why or why not?

Suppose that Samsung is considering entering the U.S. market for deep freezers. Samsung’s cost function for selling freezers in the U.S. is: Cs(qs) = 10qs + 0.025q 2 s This implies that their marginal cost is: MCs(qs) = 10 + 0.05qs. Suppose the U.S. market is monopolized by G.E. G.E.’s cost function is lower than Samsung’s due to reduced shipping. It is: CGE(qGE) = 0.025q 2 GE Suppose the demand for freezers is given by: P(Q) = 55 − 0.1Q. (a) Suppose GE is currently producing the monopoly level of freezers. How many freezers do they sell and what price do they sell at? (b) Could Samsung profitably enter the U.S. market? (c) How many freezers would GE have to produce so that Samsung would not want to enter the market? You need to find Samsung’s best response function and compute what quantity of freezers GE would need to make so that when Samsung plays its best response it makes zero profits. (d) Suppose Samsung and GE compete a la Cournot if Samsung enters the U.S. market. What would profits be? Would GE be better off committing to deter entry as in the previous part of this question or by accomodating entry and earning Cournot duopoly profits?